Greggs PLC: feels pinch after record year

Newcastle upon Tyne / UK. (gplc) Greggs PLC is the United Kingdom´s leading retailer specialising in sandwiches, savouries and other baker-fresh food on the go. It has over 1.350 retail outlets throughout the UK, trading under the Greggs and Bakers Oven brands.

«Like-for-like sales in the 19 weeks to May 10 have increased by 4,7 percent. Having grown by 6,2 percent in the first ten weeks of the year, as already reported in a preliminary results announcement, like-for-like sales progress slowed during March and April. This was partly a result of the poorer weather and a less favourable pattern of Easter holiday trading in 2008, together with a change in the phasing of our own marketing investment. However, there is also widespread evidence of reduced footfall on the high street as consumers react to the tightening economic climate» – Chairman Derek Netherton says in an Interim Management Statement.

«We have always expected the Group´s performance in the first half of the current year to be constrained by comparison to the particularly strong period in 2007. Our ability to achieve the expected steady progress over the year as a whole will depend on the trend in like-for-like sales that emerges in the coming months. There has been an improvement in our rate of like-for-like sales growth since the beginning of May (as compared to March and April), but it is obviously too early to tell whether this is likely to be sustained».

Since the beginning of the year Greggs has opened 18 new shops and closed ten, giving the company a net addition of eight and a total of 1.376 shops today. Greggs has a significant number of further openings in the pipeline, which should ensure that the company comfortably achieves its target of adding at least 40 net new shops to its portfolio during 2008.

Netherton: «The Board remains committed to delivering value to shareholders through both increased dividends and the return of surplus cash by making market purchases of the company´s own shares for cancellation. We have made no further such purchases since the expenditure of 5,2 million GBP in January, which was noted in the annual report. However, we are seeking the renewal of our authority to buy back shares today, and intend to make further purchases when we consider it to be in the interests of shareholders to do so».